Asia ACN cost pressures rising; buyers keep to the sidelines

Author: Li Li Chng

2020/08/18

SINGAPORE (ICIS)--China and northeast Asian spot acrylonitrile (ACN) prices increased recently, with regional suppliers raising offers on the back of limited spot availability.

However, buyers are either well covered by contract volumes - or could source for supply in domestic China at lower cost - and were in no rush to buy spot cargoes, thus widening a gap between offers and bids.

This situation is expected to continue in negotiations for September cargoes.

In the week ended 14 August, average spot ACN prices were at $990/tonne CFR (cost & freight) China/northeast (NE) Asia, up by $15/tonne week on week, according to ICIS data.

ICIS Editorial Chart goes here

Spot prices have steadily climbed since mid-July, due to recent production outages and turnarounds in China.

China’s Jiangsu Sailboat shut its two ACN plants with combined capacity of 520,000 tonnes/year on 16 July, but has restarted 5 August.

Shanghai SECCO also resumed normal operation following a one-week planned maintenance at one of its ACN lines in early August.

Shandong Haili remains shut for around a month from 31 July to 30 August, while a few other Chinese plants are operating at reduced rates.

Despite recent curtailed supply, supply is sufficient in China, as new capacity from Zhejiang Petrochemical, already came on-stream in end June.

In wider Asia, spot supply from regional producers was limited, as they operated at reduced rates to cut losses.

There are also upcoming turnarounds from September to November in northeast Asia.

Asian producers have been increasing their offer prices as they are under cost pressure with margins in the negative.

ICIS Editorial Chart goes here

Chinese and northeast Asian buyers however, were not in a hurry to buy spot cargoes, as they are well-covered by contract volumes.

Also, Chinese buyers preferred to source domestically as materials are currently at lower cost as compared with import prices, although some offers there were also firmer.

Downstream acrylonitrile-butadiene-styrene (ABS) was enjoying robust demand and healthy margins.

Though this may not result in further support to ACN as ABS operation rates are already near full.

Operations at acrylic fibre (AF) plants in Asia were at low rates with end demand remaining subdued.

Asian ACN Plants Production Updates

Company Location Capacity (tonnes/yr) Comment
China Petrochemical Development Corp (CPDC) Kaohsiung, Taiwan 2 x 120,000 Running at 95%. Planned maintenance for 2 lines around mid-Oct for 3 weeks.
Taekwang Industrial Ulsan, South Korea 290,000 Running at 90% since end March. To shut in Nov for 20-25 days, planned maintenance.
Formosa Plastics Corp Mailiao, Taiwan 280,000 Running at 90%, for June and July. To reduce run rate to 85-90% in August and 80% in September for routine cleaning.
Tongsuh Petrochemical Ulsan, South Korea 530,000 combined (No 3 - 265,000, No 4 - 265,000) Running at 70%.
Asahi Kasei Mizushima, Japan 200,000 Running at 70%.
PTT Asahi Chemical Map Ta Phut, Thailand 200,000 Running at below 70%.
Sumitomo Chemical Niihama, Japan 70,000 September 2020, around 30 days

Focus article by Li Li Chng

(Image: LEGO toys made out of ABS, a derivative of ACN. (James Gourley/REX/Shutterstock)

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